Michael Kitces #FinTech

3 questions advisers should ask themselves before buying new technology

If tech purchases aren't made for the right reasons, they could end up underutilized and underappreciated.

Aug 8, 2014 @ 12:05 pm

By Ed O'Brien

You hear it everywhere. Technology is evolving rapidly and to stay ahead you must jump in or your business will stumble. It's true that technology available for advisers today can make an incredible difference in their businesses — from creating a paperless office using straight-through processing and e-signatures, to sitting with a client in their living room while you scroll through their portfolio together on your iPad. But as much as technology creates opportunities to streamline business processes and enhance the client experience, doing this successfully is easier said than done.

Advisers feel the push and pull. While eight in 10 advisers reported in Fidelity's 2013 Insights on Advice Study that they wanted to increase their technology usage, 95% are still challenged by integrating and utilizing it. The last thing you want is to make a large investment in new technology only to find out that no one is using it.

(Related Read: 5 ways to improve your tech evaluation process)

The truth is, there's no one-size-fits-all approach to choosing the right technology for your business. But there are three important rules of thumb to apply when evaluating the myriad of options. Ask yourself:

1. Will this technology make us more efficient?

First and foremost, think about your workflows. What steps do you take every day in your business and how can you streamline them?

Cloud, for instance, is an example of a “hip” technology, but with huge efficiency implications. I'll never forget when one of our clients, Damian Gallina of Buttonwood Financial Advisors, was at our client event and walked up to an internet-enabled touch-screen on display, accessed his virtual desktop, and processed his employee payroll. Talk about efficient. Damian says that moving to the cloud has also allowed his team to execute seamlessly with the ability to work from anywhere, including home, during this past winter's numerous ice and snow storms. We're seeing more advisers tap into this trend, with our 2013 Insights on Advice Study showing that 32% of advisers are using cloud-based applications and 35% interested in pursuing them.

Efficiencies also come about when you reduce the number of people who touch transactions, the number of errors that result from transcribing information from one system to another, and the number of pages printed to sign a formal document. Straight-through processing, pre-fill capabilities and e-signatures are all technologies that can reduce these costly operations. And a paperless office has the added bonus of a more serene workspace.

2. Will the technology improve our client engagements?

An added bonus to increasing efficiencies is that it frees up time for you to spend on engaging your clients.

Fidelity research shows that 66% of mass affluent investors prefer a face-to-face relationship with an adviser, but those interactions don't look the same as they once did. Gone are the days of the six-foot long conference table sitting between you and your clients where you dictate the historical performance of their portfolios. Instead, investors expect a more collaborative relationship and a more appropriate setting is side-by-side in an office, or maybe in your client's home, viewing one or two media tablets, and walking through the active portfolio together, making adjustments as you go.

Younger investors in particular are more open to communicating the way they do in their personal lives, including text messaging, social media and video conferencing. Consider incorporating some of these communications into your practice to fill the gaps between face-to-face meetings, to elevate your presence and also to provide insights they may find useful. Social media can supplement and enhance current one-on-one conversations, allowing you to connect with clients – and prospects – in ways that are meaningful to them. As you ponder joining the “social” world, you must consider what you're looking to achieve, who you're trying to reach and who will manage the accounts and keep the conversations vibrant.

3. Will implementing this technology disrupt our business?

Once you've determined the technology spend meets either efficiency or client engagement goals, consider one last and important question — will this disrupt my business? In our 2013 Fidelity RIA Benchmarking Study, we found that High Performing Firms understood the potential for technology to disrupt their business and sought to reduce that disruption by placing less focus on the “latest and greatest” technologies, and more focus on making smart technology decisions.

Before purchasing something new, make sure you have assessed the technology you already have and are using it to its full potential. Also consider whether this technology investment is best to outsource. Do you work with a partner who can handle the heavy lift of investing and implementing a new technology? And can they help to train you and your team to embrace and use this technology to its fullest potential?

Remember this when you're considering the technology options: High Performing Firms described their technology environment as strong, not cutting-edge. So while you may feel cool sporting the latest technology in the office or with your clients, if it doesn't solve your business problems or improve what you already do well, you won't see the return on your investment.

Ed O'Brien is senior vice president and head of platform technology for Fidelity Institutional. Fidelity Institutional Wealth Services is a division of Fidelity Brokerage Services LLC. National Financial is a division of National Financial Services LLC. Both members NYSE, SIPC. © 2014 FMR LLC. All rights reserved. 691701.1.0 The content provided herein is general in nature and is for informational purposes only.


What do you think?

View comments

Recommended next

Upcoming event

Dec 05


ESG & Impact Forum

Thought leaders, investment strategists and practitioners will gather at the United Nations Headquarters to translate global ESG and impact investing perspectives into strategies that resonate with investors and produce desired outcomes.... Learn more


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print